Determinants of value sharing in channel relationships

Abstract

Purpose Companies involved in collaborative channel relationships aim at creating in sum a higher value than each channel partner could achieve on its own. There is relatively little empirical insight into what determines the sharing of the “value pie”. Therefore this paper aims to investigate determinants of value sharing in channel relationships. Design/methodology/approach Data for testing the hypotheses were collected through a telephone survey of managers from large industrial firms in the automotive, food, engineering and chemicals industries in Germany. Complete information on the study's questions was received from 142 firms, accounting for a response rate of 40.1 percent. Findings The results show that customer companies frequently receive larger shares of the value pie, while in most cases the value pie is shared equally. Furthermore, relationship quality, supplier motivation approaches, the goals of the channel relationship as well as the applied sharing principle are all influential in determining how value is shared in corporate practice. Research limitations/implications Because all companies in the sample were selected from only four industries, all are among the largest companies in their specific industry, and all are headquartered in Germany, the generalizability of the results is unquestionably limited to similar firms. Practical implications Customer as well as supplier firms should incorporate the identified determinants in their partnering and sharing decisions, since they have an impact on the long‐term benefit of channel relationships. Originality/value The underlying determinants of the sharing process and the value allocation to the channel partners have so far received little research attention. This paper addresses this situation.